What is Inbound Logistics?

You may have heard the term thrown around a lot lately, but what is inbound logistics actually about?

In simple terms, inbound logistics is the process of managing your inventory so that you have exactly what you need on hand at all times.

The goal is to make sure that your company can provide a service or product without incurring additional costs from suppliers or other vendors, while still operating effectively and efficiently.

Efficient inbound logistics emphasizes the importance of coordinating with suppliers for timely delivery of raw materials and minimising inventory holding costs.

Find out how integrating inbound logistics into your business can take your enterprise to the next level. Plus, learn how to prevent the most common blunders businesses make when adopting inbound logistics.

What is inbound logistics?

Inbound logistics focuses on the movement and management of materials and goods into a company, impacting production operations and supply chain efficiency. It ensures you have what you need at all times, including raw materials and components required for production.

The process also includes forecasting demand and ensuring sufficient quantities are in stock before customers place their orders.

Simply put, efficient inbound logistics relies heavily on how well you track the items carried.

You should also track how much inventory each product requires and meet customer expectations by offering fast deliveries when orders are placed.

For optimal results, companies using inbound logistics must coordinate with suppliers to provide enough inventory, while also preventing a surplus of inventory on their own shelves. It’s a fine balance.

This is typically accomplished through a combination of electronic data interchange (EDI) systems. This allows companies across various industries and supply chains to communicate more efficiently.

Inbound vs outbound logistics

Inbound and outbound logistics processes are essential for ensuring the smooth and efficient flow of goods. But they function on opposite ends of the spectrum.

Understanding the difference between inbound and outbound logistics is crucial. Inbound logistics involves receiving supplies or materials into a business, while outbound logistics focuses on delivering goods and products out to customers.

Another logistics process, known as reverse logistics, refers to the process in the supply chain where a product is returned to a manufacturer or distributor for repair, recycling, or disposal.

Inbound logistics process: Step-by-step

Managing inventory through inbound logistics typically involves a few different systems and has many steps. It’s complex, with lots of things happening at the same time. (But remember that you need to do these things anyway, and using software to support your inbound logistics makes it easier.)

Optimising inbound logistics processes is crucial for enhancing customer experience. It also plays a significant role in managing warehouse operations, delivery ETAs, and improving communication with customers, thereby increasing overall supply chain efficiency.

Let’s take a closer look at how you can better manage your supply chain from start to finish, without too much overlap or confusion about what needs to happen when.

▶️ Step One: Create a master schedule

For your business’s inbound logistics strategy to run smoothly, you must first create a master schedule. It should work with customer demand and supplier availability.

To ensure efficiency, it is crucial to calculate inbound logistics by measuring performance, including error, defect, and on-time delivery rates for shipments. This will allow your company to quickly place orders for necessary items. It will also ensure customers receive their products as soon as possible.

▶️ Step two: Monitor demand to meet customer expectations

Another part of effective inbound logistics is tracking – it’s essential to track how often customers are purchasing certain items.

Efficiently managing inbound logistics can lead to improved customer satisfaction by ensuring that products are available when needed, reducing wait times and potential stockouts.

This helps you determine when items are likely to sell out. As a result, your company has time to place orders or make other arrangements for these product shortfalls.

▶️ Step three: Tie in suppliers with EDI systems and other protocols

For it to work properly, companies must rely on suppliers and vendors.

For this reason, many experts recommend using electronic data interchange (EDI) systems. EDI makes it easy to send requests back and forth between supply chain partners. And it can be done until the issue is resolved.

Companies must decide whether to handle their own inbound logistics or outsource it, depending on factors such as incoming goods, industry type, and buyer-seller relationship.

These types of protocols ensure all parties involved have access to real-time information. Information about what changes need to be made across the board.

Inbound logistics touch points

Inbound logistics often go wrong when a company fails to keep track of touchpoints throughout the process.

In fact, many businesses don’t properly understand how their supply chains work until something goes wrong. They can’t meet customer demands by shipping products from another location or working with other vendors.

The challenges of inbound logistics, including high costs, uncertain delivery dates, and unpredictable lead times, make it difficult for businesses to maintain ideal inventory levels and improve warehouse efficiency and productivity.

Here’s what you need to know about communication at these key stages.

▶️ Customer touchpoint

This point of communication occurs whenever your customers place an order for certain items. These items are those that your business carries in its inventory.

The benefits of outbound logistics include customer satisfaction, retention, and confirmation of product quality and completeness.

▶️ Supplier touchpoint

In this touchpoint, your suppliers must provide products quickly without too much lag time. There shouldn’t be a delay between making shipments across town or around the world.

▶️ Intermediary touchpoint

As a part of effective inbound logistics strategies, it’s important not to forget about intermediaries.

These touchpoints, such as warehouses, distribution centers, and freight forwarders, can play a key role in the success of your supply chain by ensuring the smooth flow of materials, reducing delays, and optimising overall efficiency.

Best practices for streamlining

As more businesses use inbound logistics practices each day, experts have found a few tried and true ways to keep their inbound logistics management strategies running smoothly.

One crucial aspect is inventory management, which involves using software to ensure fast order fulfillment and maintain order and inventory accuracy.

1. Track your inventory with ease using a warehouse management system (WMS)

Tracking inventory levels is the most important part of managing your supply chain. It is done through inbound logistics practices.

To simplify this process, many companies use software to monitor product quantities. They do so down to the individual unit level. This is done instead of tracking an entire box or carton at once.

A warehouse management system (WMS) can significantly improve efficiency and provide full visibility into the supply chain by streamlining receiving, put away, inventory management, picking, and more.

This allows you to determine how much inventory you need without wasting time.

2. Keep an eye out for new technologies that can help save time and money

Another way companies make sure they fully utilise their inbound logistics is by keeping an eye out for new technologies. These can help them save time and money in the future.

One such technology is a transportation management system (TMS), which can compare shipping quotes, schedule shipments, track deliveries, and provide full visibility into the supply chain.

For example, you may want to consider software that allows manufacturers to monitor production processes. This should work from start to finish without ever leaving their own facilities.

These tools are beneficial when companies have high-tech assembly and traditional manufacturing centres. This is so they can coordinate efforts across multiple locations even if teams aren’t working side-by-side every day.

Inbound logistics management helps streamline supply chain practices when it comes down to it. It will also deliver goods directly where they need to go at a moment’s notice.

By following today’s best practices, your business will run more smoothly, and make better use of your resources along the way.

Improve Your Inbound Logistics Strategy Today

Inbound logistics can affect all areas of a business. It covers everything from how you receive inventory to how your team coordinates with suppliers and customers alike.

Supply chain management (SCM) helps synchronize the supply chain by controlling the flow of goods from the point of origin to the point of consumption, ensuring partnerships and mutual benefit among participants.

Fortunately, advancements in technology have streamlined this process by making supply chain management easier for everyone without sacrificing quality. 

Managing inbound and outbound logistics is crucial for businesses aiming to optimise these processes for cost savings, customer satisfaction, and operational efficiency.

Contact us today if you want to learn more about getting started with inbound logistics management practices.